The European Union’s (EU) blatantly discriminatory tax and AML/CFT policy stance has been gnawing at my insides for some time, since I first highlighted it in May 2019.
Recently, much of the feedback received from Europeans in particular, cautioned against labeling this discriminatory stance as racist, suggesting perhaps the reason that every single country on the list is a relatively small, weak, non-white former European colony, is either pure coincidence, or that we are in fact the world’s most criminal, corrupt, money-laundering, tax-shielding shady people, who deserved to be named, shamed and schooled by those who know better.
Indeed, the EU’s list of high-risk countries, if nothing else, ought to signal strongly to serious money launderers to shift to jurisdictions which will never be so listed – i.e. EU member states and their allies (even if identified by the FATF as presenting strategic deficiencies in their AML/CFT frameworks). Brilliant business strategy, EU!
Which brings me to the fundamental issue of the EU’s (ever-changing) methodology.
In the first place, money laundering and terrorism financing are specific crimes which carry standard legal definitions.
The EU’s methodology to “identify high-risk third countries having strategic deficiencies in their regime on AML and CFT” goes well beyond the standard definitions to include non-legal criteria such as “international offshore financial centres”, “strength of economic ties with the EU” and “a jurisdiction is identified as a least developed country (LDC) by the UN”.
The methodology stops short of stating how “strength of economic ties with the EU” affects the likelihood of being listed, but the evidence suggests that there is an inverse relationship.
Furthermore, it would also appear that this criterion supersedes all others, given that “international offshore financial centers” such as London, New York and Zurich have never been listed, unlike small ones.
Since 1971, the UN has recognized LDCs as “highly disadvantaged in their development process, for structural, historical and also geographical reasons… at risk of deeper poverty and remaining in a situation of underdevelopment…characterized by their vulnerability to external economic shocks, natural and man-made disasters and communicable diseases…in need of the highest degree of attention from the international community.
“Currently, the 47 LDCs comprise around 880 million people, 12 percent of the world population…less than two percent of world GDP and around one percent of world trade.”
Based on “the particular constraints they face”, the EU’s methodology purports to exclude LDCs from their list of high-risk jurisdictions, “unless those LDCs are identified as presenting a threat for the EU financial system…or are identified as an offshore financial centre” (which by the way, holds for ALL countries with insignificant “strength of economic ties” to the EU).
In essence, therefore, the EU makes no exception for LDCs, and indeed, has included LDCs Afghanistan, Cambodia, Myanmar, Uganda, Vanuatu and Yemen in their most recent list.
I believe the United Nations Conference on Trade and Development (UNCTAD) has a duty to address with the EU, their ongoing grossly disproportionate discrimination and further marginalization of these most vulnerable and unstable countries.
If our greatness is measured by how we treat the weakest amongst us, the EU’s reprehensible actions suggest that they have never been and will never be great (again).
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